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2021 (8) TMI 340 - AT - Central ExciseLevy of penalty under Rule 26 of the Central Excise Act, 2002 - valuation of the air coolers supplied by M/s Mutual industries to the appellant - HELD THAT - The Show Cause Notice examine the evidence recovered from M/s Symphony and records the statement of various employees of M/s Symphony to allege that the sale price of symphony is much higher than the price at which they purchasing coolers. Learned Counsel assert that the investigation in all these cases was common. The agreement of the appellant with various vendors including Mutual Industry was same as other. The allegations in the Show Cause Notice are also same. From the facts, it is evident that the charges and the allegations are similar. The evidence relied upon by the Revenue is also similar in the circumstances. In the instant case the facts and dispute involved are similar to the case of M/S. RAVI KIRAN PLASTICS PVT. LIMITED AND OTHERS VERSUS COMMISSIONER OF CENTRAL EXCISE ST., VADODARA 2014 (2) TMI 211 - CESTAT AHMEDABAD where it was held that the charges levelled against the manufacturers are not sustained. Consequently, no penalty was imposed on the appellant in that case. Penalty set aside - appeal allowed - decided in favor of appellant.
Issues:
- Imposition of penalty under Rule 26 of the Central Excise Act, 2002 on the appellant by M/s Symphony Limited. - Dispute regarding valuation of air coolers purchased by the appellant from M/s Mutual industries. - Settlement of demand against the supplier under SVLDR Scheme. - Similarity in controversy and penalty imposition with cases involving other manufacturers. - Application of Tribunal decisions in similar cases to the present situation. Analysis: 1. The appeal was filed against the penalty imposed under Rule 26 of the Central Excise Act, 2002 by M/s Symphony Limited. The dispute arose concerning the valuation of air coolers purchased from M/s Mutual industries. The Commissioner confirmed the demand and imposed a penalty of ?2,50,000 on the appellant. However, it was noted that the main noticee, Mutual industries, had resolved the issue with Revenue under the SVLDR Scheme. 2. The appellant argued that similar controversies regarding the valuation of goods purchased from various manufacturers had been decided in favor of the manufacturers by the Tribunal in previous cases. The appellant highlighted that the investigation, agreements, and allegations in these cases were common, leading to the assertion that no penalty should be imposed in the present case. The appellant cited specific cases, including Ravi Kiran Plastics Pvt. Ltd. vs. CCE 2014 and Symphony Comfort System Ltd. vs. CCE 2014 and 2016, where penalties were set aside by the Tribunal. 3. The Authorized Representative for the Respondent relied on the impugned order, while the Tribunal considered the rival submissions. It was observed that the penalty was imposed on the appellant under Rule 26 of the Central Excise Act, 2002, even though the demand against the supplier, Mutual Industry, had been settled under the SVLDR Scheme. The Show Cause Notice alleged that the appellant had facilitated undervaluation of goods, with similarities in agreements and allegations across cases. 4. Referring to the case of Ravi Kiran Plastics Pvt. Ltd. 2014, the Tribunal analyzed various aspects, including the control exerted by M/s. Symphony over the manufacturing process, pricing, and supply of essential tools. The Tribunal concluded that the issues in the present case mirrored those in the Ravi Kiran Plastics case, leading to the setting aside of the penalty. The Tribunal emphasized the importance of independent manufacturing processes and procurement decisions in determining applicability under the Central Excise Act. 5. Based on the precedent set by the Tribunal in similar cases, the appeal was allowed, and the penalty imposed on the appellant was set aside. The decision highlighted the importance of independent manufacturing practices and the inapplicability of Rule 10A of Valuation Rules in certain transactions. The judgment was pronounced on 06.08.2021.
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